New California State Bill to Mandate Licenses for Crypto Exchanges, Back Bank-Issued Stablecoins

The state government of US' California state may get a new crypto-centric bill to ensure that the legal provisions around the sector more concrete. Called ‘BitLincese', this Digital Financial Assets Law will mandate crypto exchanges to apply and bag operational licenses in the state. In addition, the bill would also direct stablecoin issuers to have a bank charter. At this point, the US is the second-most crypto friendly nation in the world after Hong Kong, a latest ‘Worldwide Crypto Readiness Report' by Foresx Suggest had said recently.

At present, the bill awaits the approval signature of Californian Governor Gavin Newsom.

“The bill's licensing provisions are designed to install the same type of onerous licensing and reporting regime that has stunted the growth of the crypto industry and limited access to safe and reliable crypto products and services in New York. Additionally, it would make it impossible for many stablecoin issuers to operate within the state to generate significant economic activity and bring countless jobs to the state,” an industry trade group, The Blockchain Association explained the Californian law in a Twitter thread.

The last day for Newsom to sign or veto the bill by September 30, said a Coindesk report.

Earlier in 2015, the state of New York also passed a similar bill to regulate the crypto sector in its arena.

“While the newness of cryptocurrency is part of what makes investing exciting, it also makes it riskier for consumers because cryptocurrency businesses are not adequately regulated and do not have to follow many of the same rules that apply to everyone else,” Assembly Member Timothy Grayson (D-Concord), the bill's sponsor had said in a prior statement.

While the US is yet to get its laws around the crypto sector, the law enforcement authorities there are taking conscious efforts to safeguard its crypto community from unforeseen financial risks.

Back in August, for instance, the US Federal Reserve issued additional guidance for banks considering activities involving cryptocurrencies, emphasising that firms must notify the Fed beforehand and make sure whatever they do is legally permitted.

The Fed said in the supervisory letter that banks supervised by the agency should take several steps before engaging in any crypto-related activities, including determining if existing laws dictated any particular filings and whether any activities under consideration were legally permissible.